Columbia Distributing already handled Constellation’s beer brands—which include Corona, Modelo Especial, Ballast Point, and others—and it added the spirits and wine portfolio in June. The agreement covers both Washington and Oregon. While Portland-based Columbia previously had a shared-services agreement with Young’s to warehouse and deliver wine and spirits, it had no wine and spirits sales structure. The expanded agreement for more than 2 million cases of Constellation’s wine and spirits “provided a new opportunity to take on wine and spirits directly,” explains Chris Steffanci, Columbia’s president and CEO. “We’re increasingly selling across categories, because more and more consumers are drinking that way,” he says. “Retailers need to offer the variety to meet that demand. It makes sense to be a one-stop shop for retailers.”

Chris Stenzel, president of Constellation Brands’ wine and spirits division, also sees consumer consumption patterns as drivers of the Northwest move, noting, “55% of total beverage alcohol dollars are spent by consumers who drink across all three categories.” In determining the best route to market, Constellation looks for “coverage and capabilities” that properly address the supplier’s diverse portfolio, he says. “We have products that sell in convenience stores, brands that are in fine wine shops and high-end restaurants, and everything in-between. We found Columbia was best equipped in the Pacific Northwest for our wine and spirits business, and they happened to be our beer distributor.” Overall, Stenzel sees opportunity for beer distributors to help grow wine sales in some trade channels where they excel, such as convenience stores and the on-premise.

Steffanci says the move was a big investment for Columbia—which is owned by the Meritage Group, a private equity firm. It included compensating Young’s for the rights to the spirits brands in Washington, along with scaling a sales staff. He says the biggest challenge so far has been “understanding the breadth of the wine and spirits portfolio.” But the company remains undeterred. “We’re involved in dialogue with other wine and spirits suppliers, with a particular focus on spirits. We’re hoping to secure large spirits partners in the next few months,” Steffanci says.

Columbia isn’t the only beer wholesaler interested in tapping into wine and spirits. “As suppliers diversify, distributors are too,” notes Craig Purser, president and CEO of the National Beer Wholesalers Association (NBWA). “It’s about the right product mix.” Pointing to the dramatic “concentration” of wine and spirits wholesalers today, Purser says some beer wholesalers have found “a huge opportunity to fill their market with new products, such as lower-alcohol spirits and small wine brands.”

“For the last 15-20 years, there’s been a big wave of wholesaler consolidation,” adds Joe Thompson, president of industry consultancy Independent Beverage Group. “That’s taken costs out of the system, and a more efficient mega-distributor has emerged.” Now those distributors are seeking continued growth through diversification. “Expanding their distribution business into other categories, including wine, spirits, and non-alcoholic beverages, makes sense,” Thompson says.—Terri Allan